The expansion, expected to be completed later this year and start production in March 2012, will make the NU engine for the small sedan Elantra being produced at the Montgomery, Alabama, plant. The investment would create 214 new jobs.
The engine will also be used in the Hyundai Santa Fe and the Kia Sorrento models manufactured at the Kia Motors Corp. assembly plant at West Point, Georgia, a joint statement from Hyundai and the state of Alabama said.
"The enhancements to the engine plant will not only increase our engine capacity by 300,000 units per year, it will also provide us the opportunity to implement new manufacturing technologies," Hyundai Motor Manufacturing Alabama (HMMA) President and CEO Y.D. Lim said in the statement with Alabama Governor Robert Bentley.
Bentley thanked the South Korean company for its planned investment in Alabama, adding that Hyundai contributed $1.5 million to the governor's relief emergency fund for victims of the recent deadly tornado outbreak in the state.
Hyundai's US sales are booming, with the Korean firm the fastest growing major automaker in the US market.
The Alabama plant makes two of the hottest selling cars in the US market, the midsize sedan Sonata and the small sedan Elantra. Its assembly lines operate as much as 20 hours per day during weekdays and on some Saturdays to meet high demand.